Planet Still Spirals Downward Financially

The Orlando-based Chain Lost $28.2 Million In The Second Quarter And Is In Default On Various Loans.

August 13, 1999|By Jerry Jackson of The Sentinel Staff

The financial drain continued at Planet Hollywood International Inc. during the second quarter.

The Orlando-based movie-theme restaurant chain lost $28.2 million, or 26 cents a diluted share, in the quarter ended June 27, compared with a loss of $1.2 million, or 1 cent a share, a year ago.

Planet Hollywood also reported that it is still in default on various loan agreements, but provided no details other than to say it is still in talks with bondholders and secured lenders.

Revenue for the quarter was down more than 26 percent to $76.6 million. Same-store sales were off 22 percent.

Planet Hollywood Chairman and Chief Executive Officer Robert Earl was traveling in Europe on Thursday and could not be reached for comment. Chief Financial Officer Thomas Avallone did not respond to calls about the ongoing financial crisis at the company.

The loss was no surprise, however, because Planet Hollywood had said in previous reports that it expected to lose money throughout 1999, and hoped to return to profitability sometime in 2000.

``They've got a major task ahead just to keep things up and running,'' said Stephen Schoene, a bond analyst who has followed the company for Miller Tabak Hirsch & Co. in New York.

Miller Tabak in the past has traded some of Planet Hollywood's junk bonds - noninvestment grade, 12 percent debentures - but there has been ``very little interest'' in the bonds in recent months, Schoene said, following even more downgrades.

Planet Hollywood, to conserve cash for continued operations, missed making a $15 million interest payment on the bonds due on April 1.

A $12.5 million bank payment also was missed, but at least some of the bank debt may have been repaid recently when the company raised cash through asset sales.

The company generated $18 million through the sale of its 20 percent stake in a New York hotel and raised $17 million in the sale and leaseback of its Orlando headquarters property.

The company's stock has languished at penny-stock levels in recent months - a stratospheric plunge from more than $30 a share in 1996 when it went public.

The stock closed at 75 cents a share Thursday, unchanged on the New York Stock Exchange.

Any individual shareholders other than principals such as Earl and Hollywood stars such as Sylvester Stallone have presumably already cut their losses or are gambling on a turnaround - but any who still are holding on are not getting advice from the investment community.

A recent survey by Zacks Investment Research turned up no equity analysts following Planet Hollywood, down from a half dozen or so two years ago.

That's no surprise either, said bond analyst Schoene, because most stock analysts early on were seemingly starstruck by the brand and blindsided by the fall.